Bond markets began the session in incrementally weaker territory than Friday afternoon after having held mostly steady in Europe and Asia. Bigger moves to the downside followed the stronger-than-expected Durable Goods report, with 10 yr yields cracking 2% for the first time since April 2012. MBS hit their lowest levels since before QE3 and rate sheets came out in their worst shape since August. Equities opened up with a fairly swift move lower, which perhaps allayed some fears of being kicked whilst down on the part of bond markets. The rest of the session was characterized by gradually ebbing volume, gradually decreasing volatility, and gradually higher prices for MBS and Treasuries, though the former outperformed noticeably. Several lenders offered positive reprices throughout the day, but the market movements do very little to inform the bigger picture.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 4:03 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
Additional Reprice Potential As MBS Hit Highs
Thinner trading volumes in the afternoon have given bond markets some room to run after hours. This is much more evident in MBS, which have seen 3.0s make it back above the morning's highs, currently down only 1 tick from Friday's close at 103-14.
10yr yields are still 1.7 bps off Friday's latest levels and at 1.9667, not quite back to this morning's lows. Stocks have been fairly equivocal and volumes much lower than in the first two hours of the session. The MBS bounce back is equivalent to a consolation prize. To be clear, it's very nice to see and it keeps the door open for positive reprices, but it's not the result of any major underlying shift or market motivation.
MBS Edge Up To Pre-Data Levels, Room For Reprices?
Fannie 3.0s are back in line with prices that prevailed before this morning's stronger-than-expected Durable Goods data, now down 6 ticks on the day at 103-09. Naturally, the hit to rate sheets has been much larger than 6/32nds in most cases, not to mention the fact that rate sheet print times fell hard on the heels of the more disconcerting moments of the morning sell-off.
On any other day, we'd already be seeing a positive reprice or two. The slow grind back toward "less bad" levels does indeed create that possibility, but we'd emphasize the differences between today and a normal morning sell-off during a less chaotic time for bond markets. Possibilities > Likelihoods, but at least we're moving in the right direction.
Live Chat Featured Comments
Victor Burek : "plaza repriced about .25 better"
Nate Miller : "REPRICE: 3:14 PM - Interbank Better"
Nate Miller : "REPRICE: 2:44 PM - Caliber Funding Better"
Matt Hodges : "6-8 tics better...my guess is .125-.25, depending on lender and program"
Ted Rood : "Be interested to know how much these reprices are. Not like MBS have soared since this AM."
Matthew Graham : "REPRICE: 2:17 PM - Plaza Better"
Tom Schwab : "REPRICE: 2:00 PM - Franklin American Better"
Brett Boyke : "Bloomberg - http://www.bloomberg.com/news/2013-01-28/u-s-stock-futures-little-changed-before-durable-goods.html The S&P 500 has rallied 5.3 percent this month, poised for the best start of a year since 1987. Pension funds may need to sell stocks and buy fixed income to rebalance their asset allocations by the end of the month, according to Societe Generale SA. U.S. pensions may pull $22 billion from equities, strategist Ramon Verastegui wrote in a note.
Ethan Brizzi : "REPRICE: 1:50 PM - Provident Funding Better"
Brent Borcherding : "http://blogs.wsj.com/marketbeat/2013/01/18/gluskins-rosenberg-bear-market-for-treasurys-dont-bet-on-it/"
Brent Borcherding : "I posted this last week, but if you're looking for something to make you feel better, look no further than David Rosenberg. This guy has been right about Treasuries way more often than not & he's been dead on for the last 5+ years.... "
David Gaffin : "Thanks for that Charles. Helps bring down the Blood Pressure and gives some hope and confirmation of my explanation to borrowers..."
Charles Eriman : "Great on the latest events of the last several days and going forward. http://www.cnbc.com/id/100412839"
Tom Bartlett : "rally cap on here!"
Sunny Singh : "We should all be like that bud light commercial....where everyone leans their beer forward at the same time and the field goal kicker makes the field goal....v"very superstitious" "
Gus Floropoulos : "now is when having live MBS pricing comes to be a huge asset. Monitoring the charts allows to make calculated decisions based on trends and resistance levels. "
Timothy Baron : "Got a triangle going right now. Might see break either way."
Gus Floropoulos : "we've lost over 100 bps in a week, close to 200 bps in this month.."
Ken Crute : "when r/p's for the better come out I may lock then "
Gus Floropoulos : "i would expect some relief, even if the trend continues to be bearish"
Matt Hodges : "technicalities about whether or not it was a recess appointment"
Jeff Anderson : "Interesting. Thanks, TM, for the post. I thought what the King did was just assumed to be law."
Matt Hodges : "discussed a bit last week. NLRB is the specific ruling. It's speculated that CFPB could be affected, but O Admin claims not so"
Tim McNerney : "Anyone have thoughts on the Bloomber article regarding the CFPB http://www.bloomberg.com/news/print/2013-01-28/new-consumer-bureau-decapitated-by-court-ruling.html"